Oil prices down, tempered by ME war

SINGAPORE: Oil prices eased in Asia on Monday but analysts said losses were tempered by supply concerns in the crude-rich Middle East after Saudi-led warplanes struck rebel targets in Yemen.

US benchmark West Texas Intermediate for May delivery fell 71 cents to $48.16 and Brent crude for May eased 35 cents to $56.06 in late-morning trade.

“There is a big fear that the deteriorating conflict in Yemen could see a disruptional flow in the supply of oil in the gulf region,” Nicholas Teo, market analyst at CMC Markets in Singapore, told Agence France-Presse.

“At the moment the price of oil is falling, but there could be a reversal in trend if the situation persists,” Teo added.

Jets bombed Yemen’s main international airport and a renegade troop base in the capital Sanaa Sunday.

The raids came just hours after United Nations workers were evacuated following deadly fighting that has sent tensions soaring between Tehran and other Middle East powers.
India and Pakistan also moved to airlift their citizens from the country.

Yemen is a small oil producer that sits along the Bab al-Mandab Strait, through which about 3.8 million barrels of oil per day are transported.

The country has been gripped by turmoil since the Shiite rebels launched a power takeover in Sanaa in February.

Singapore-based Phillip Futures said in a commentary that Yemen is “an international shipping chokepoint and thus, we are concerned over trade disruptions in the region.”
“Seeing as the rebels have yet to react to the airstrikes, the conflict could go either way,” it said.

It said the main focus for dealers this week will be the US non-farm payrolls data Friday, with dealers seeking clues on whether the US economy is healthy enough for the Federal Reserve to hike interest rates later in the year as scheduled.